By Marie Mannes and Alessandro Parodi
GOTHENBURG, March 31 (Reuters) – Volvo Cars said on Tuesday it had agreed to convert into shares more than $300 million of its sister brand Polestar’s debt, in a move aimed at focusing production of the Polestar 3 electric SUV at its U.S. plant in South Carolina.
The two carmakers, ultimately owned by China’s Geely Holding, have been battling with cash issues and a delayed ramp-up of EV production due to weaker than expected electrification trends, especially in the U.S., and duties on cars whose production heavily relied on Chinese plants.
Following the deal, Polestar will discontinue Polestar 3 production in Chengdu, China, and only continue making the model at Volvo Cars’ Charleston, South Carolina plant, a company spokesperson told Reuters.
“The move to consolidate global Polestar 3 production in Charleston help generate efficiencies for both companies, whilst also underscoring our confidence in the plant and the role it plays in our manufacturing footprint,” Volvo Cars CEO Hakan Samuelsson said in a statement.
EFFICIENCY DRIVE
Samuelsson was brought back last year to reprise his role as Volvo Cars CEO for a two-year term, and was quick to state that he intended to further integrate with the other brands of the Geely family while launching efficiency measures that included 3,000 job cuts.
Shortly after his appointment, he announced that the Polestar 7 would be built in Volvo’s upcoming Kosice factory in Slovakia.
Focusing production of the Polestar 3 in Charleston will reinforce cost synergies between the two companies, Polestar CEO Michael Lohscheller said in the statement.
The Polestar 3 is built on the same design, technology and at a similar price as Volvo’s high-end EX90, whose lower than expected sales contributed to the impairment of over $1 billion the group booked last July.
The EX90 sold just over 16,000 units globally in 2025, well below the annual production capacity of up to 150,000 at the Charleston plant.
GEELY HOLDING’S GLOBAL PUSH
Polestar, formerly majority-owned by Volvo Cars before it divested most of it to Geely Holding in 2024, has relied heavily on resources and funding from its new owner to help make its vehicles as sales and profits remain below expectations.
Geely Holding said in January it aimed to rank among the world’s five leading automakers with global sales of more than 6.5 million vehicles by 2030. Last week, it announced plans to double the number of vehicle projects it manages at its European technology hub by next year.
The Chinese company is expected to swap credit worth about $300 million into Polestar shares. Similarly, Volvo Cars will carry out an initial conversion of about $274 million, followed by a second one of about $65 million in the second quarter of 2026, doubling its stake in Polestar to about 19.9%.
Volvo Cars has also extended the maturity of the remaining credit with Polestar, worth $661 million, to 2031.
The deal was announced a day after Volvo Cars said it would become the exclusive distributor of Lynk & Co cars in Europe, another Geely sister brand.
(Reporting by Marie Mannes in Gothenburg and Alessandro Parodi in Gdansk, editing by Milla Nissi-Prussak)
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